It's Buffett's Move

Berkshire Hathaway drove the price higher
When its IBM deal hit the wire,
So the charge could be made
Of an insider trade,
Since Buffett knew he was the buyer.

In a case of self-fulfilling prophecy, Berkshire Hathaway's purchase of 5.4% of IBM for $10.7 billion prompted a 12% surge in the technology services company's share price once it became public. Although large purchases of public shares must normally be disclosed in 13F filings, the SEC grants about 60 confidentiality waivers every quarter, allowing investors to accumulate shares without driving their prices up. For his part, Mr. Buffett has overcome his fear of tech companies by recognizing in IBM an entrenched service provider with a protective "moat" against would-be competitors. Notwithstanding new highs in the share price, Mr. Buffett believes that, for IBM, the best is yet to come.
Hat tip to... somebody on Twitter for the insider trading joke, and apologies for forgetting who it was.

Who Falls First?

Economists smartly conversed to,
Of three downturns, determine the worst two:
Those of debt uncontrolled
In the New World and Old,
Or of that which exports to the first two?

Writing in the Wall Street Journal, Ian Bremmer and Nouriel Roubini try to analyze, among Europe, China and the USA, whose economy has it the worst. They note that, in all three cases, "kicking the can down the road has staved off disaster so far, but the cans are getting bigger and heavier." Their unsurprising conclusion is that Europe will fall first and hardest due to the severity of its debt crisis. America and China may not indulge in schadenfreude, however, as both would see their exports to Europe reduced.

Under One Roof

Said an old man who found his domain full
Of his grown, jobless kids: "Though it's painful,
If you must lay about,
Then I'm crowding you out
Of the market for jobs that are gainful."

The ties that bind are tighter than ever when the economy is tight. The Wall Street Journal reports that 59% of parents recently provided financial assistance to their grown, out-of-school children. Of all adults between 25 and 34, 5.9 million now live with their parents, up from 4.7 million before the recession. Paradoxically, older workers who may be putting off retirement - in part to help support their unemployed progeny - may be crowding younger workers out of the job market, says journalist Joanne Lublin.

From Deep Pool to Bottomless Pit

When volume and confidence rise up,
Investors approvingly size up
The debt of a nation
In great circulation;
Less so when liquidity dries up.

Now that the Athenian contagion has spread to Rome, the thing that made Italy's sovereign debt so attractive - namely, the shear amount of it - has become a focal point for investor fears and issuer nightmares. At €1.9 trillion ($(2.6 trillion), Italy ranks behind only the USA, UK, Germany and France in the league table of sovereign debt. As the Wall Street Journal noted, big investors felt comfortable with Italian bonds, despite the country's 120% debt-to-GDP ratio, because they knew they could always sell their position. Suddenly, this is no longer true, and Rome must figure out how to roll over the next €300 million of maturing bonds, which the market now prices at over 7%.

Cheer Up

Said the company manager, Russo:
"I'd be bullish if only I knew so,
But in times of distress,
I hate to profess
We'll expand, though we really may do so."

Small businesses say they aren't hiring, yet they keep adding workers.

That's the paradox examined by Kelly Evans, the Wall Street Journal's Ahead of the Tape reporter. As shown in the chart, employment at small companies (50 or fewer employees) has grown by 6.5% since 2001, and such firms have added net new jobs in each of the last five months. On the other hand, the National Federation of Independent Business "optimism index" has averaged below 90, a level associated with a downturn, for the last two years. Although the October index has just come in at 90.2 - the highest since June - only 3% of small business owners told the NFIB that they intend to hire in the next three months. What would explain the gap between the gloomy talk and the more confident walk?

Choose Your Course Wisely

Said the head of a fine university:
"My friends, it's a time of adversity.
You must learn a career
That the money spent here
Will be more of a blessing than curse," said he.

Whether occupying Wall Street or just their old room at home, today's college graduates are beset by record un- and underemployment, as well as overindebtedness. For those anxious undergraduates trying to set the best course in difficult waters, the Census Department has provided a compass of sorts. Its 2010 employment survey (via the Wall Street Journal) breaks down the jobless rates and salary ranges by 173 different majors. Among the hardest hit? Psychology majors; while those who studied pharmacology do quite well providing their anxiety medication.

Fannie, Freddie, Financial Crisis

A party that needn't be named
Made GSEs chiefly to blame
For the mortgage collapse,
Though inquisitive chaps
Say the data don't back up this claim.

Writing in The Big Picture blog, Roosevelt Institute fellow Mike Konczal brings out the data to refute the oft-heard claim that the cause of the mortgage crisis was Congress' pushing Fannie Mae and Freddie Mac to make imprudent loans. Among the key facts:

• More than 83% of subprime loans issued to 2006 were from private firms, and went into the private label securitization market. 
• From 2002-2005, the GSEs (government-sponsored enterprises, such as Fannie and Freddie) saw their share of US mortgage originations drop from 50% to 30%. 
• Before the crash, conservative think tanks such as the American Enterprise Institute were arguing that the GSEs were were blocking the issuance of subprime mortgages, by purchasing too few of them. 

Liquidators Liquidated?

There's many a bold innovation
That may end up in sad liquidation,
When its marketing might
Would seem to invite
A bigger, upstart imitation.

Though it once brought the deal-hunting pros out,
Filene's, like a candle that blows out,
Couldn't counter attacks
From Marshall's and Maxx,
And is headed for one final close-out.

The news that discount retailer Syms filed for Chapter 11 was made more poignant by the fact that its subsidiary, Filene's Basement, originated the off-price liquidation business at its Boston department store in 1909. This was a second trip to bankruptcy court for Filene's Basement, which was auctioned off to Syms two years ago. The original bargain-basement legend enjoyed great customer loyalty for decades, but found it hard to compete with the influx of larger competitors such as TJX (owner of TJ Maxx and Marshalls) and Ross Stores.

Overheard at the G-20 in Cannes

"Monsieur Président," said Premier Hu,
"If the Greeks carry on as they do,
We would scarcely esteem
Your stability scheme,
Or the chance of financing it, too."

When President Nicolas Sarkozy, host of this week's G-20 summit in Cannes, met Premier Hu Jintao for dinner, he would have hoped to wine and dine the Chinese leader into backing the European Financial Stability Facility (EFSF) with some of his country's $3 trillion in foreign reserves. Instead, the entire project has been thrown into doubt by Prime Minister George Papandreou's call for a Greek referendum on his country's bailout. Alarmed that the referendum is likely to fail, European leaders have responded with an ultimatum, in the words of Chancellor Angela Merkel: "Does Greece want to remain part of the euro zone or not?"